Reliable Ways to Fund a Startup
As an entrepreneur mentor, one of the most frequent questions I get is, “How do I find venture capital?” I always answer that there is no magic. Contrary to popular myths, no one will have new and exciting business ideas. they are waiting for you to invest money.
On the other hand, when buying cars, houses, or other major consumer goods, you may not find many other creative options for starting a business. If you feel like becoming an entrepreneur, I encourage you to seriously consider each of them, and then zero one or two. If these don’t work for you, please be completely discouraged.
Of course, each option has advantages and disadvantages, so a certain option may not be available or attractive to you. For example, professional investors attach great importance to their previous entrepreneurial experience and hope to own a portion of commercial capital and control the funds they provide. These are difficult for people who start a business for the first time.
Therefore, what you are qualified to obtain and what you are willing to give up in order to turn your dream into a viable business is always a question. Click on the slide to read my list of the 10 most common funding sources I listed today, in reverse order of priority, and use some rules of thumb to direct your attention:
Find a bank loan or credit card line of credit.
Look up bank loan or credit card credit limit.
Generally speaking, this will not happen with new start-ups unless you have good credit or are willing to risk existing assets as collateral. In the United States, the Small Business Administration (SBA) may be able to inject cash without the normal backup requirements.
Trade stocks or services for start-up assistance.
This is often referred to as trading your skills or what you have for what you need. An example is the negotiation of free office space by agreeing to support the computer systems of all other tenants in the office. Another common example is the exchange of shares for legal and accounting support.
Negotiate advance payment with strategic partners or customers.
They are looking for important customers or partner companies. They think your ideas are valuable and are willing to pre-pay your royalties to complete your development. Changes to this topic include advance licensing or white label agreements.
Join a business incubator or accelerator.
These organizations, such as Y Combinator, are very popular and are generally associated with major universities, community development organizations, and even large companies. Most provide free resources for startups, including offices and consulting, but many also provide seed funding.
Request venture capital investors.
These are professional investors, such as Accel Partners, who invest institutional funds in qualified start-up companies, usually with proven business models, ready to expand. They are usually looking for great opportunities, need millions of dollars or more in funding, and have a proven team. Look for enthusiastic introductions to complete the job.
Apply to local angel investment groups.
Most metropolitan areas have a group of local high net worth individuals who are interested in supporting startups and are willing to provide up to $ 1 million in co-financing to eligible startups. Use online platforms like Gust to find them, and use your local network to find platforms related to your industry and passion.
Launched a crowdfunding campaign.
In this type of funding source, anyone can participate in accordance with the JOBS Act, such as online sites like Kickstarter. Here, people make promises online to their startup during the event to pre-order products to later deliver, donate or receive rewards, such as t-shirts.
Apply for a small business grant.
These are government grants to support new technologies and important causes, such as education, medicine, and social needs. A good place to start is Grants.gov, a searchable directory of more than 1,000 federal grant programs. This process is very long, but it will not cost you any equity.
Present your needs to your friends and family.
As a general rule of thumb, professional investors will hope that you have obtained participation from this source to show your credibility. If your friends and family don’t believe you, don’t expect outsiders to intervene. This is the main source of non-personal funding for very early start-ups.
Financing your startup company yourself.
The cost of starting a business is at the lowest level in history, and more than 90% of startups are self-funded (also known as bootstrapping). It may take longer to save some money before starting and organic growth, but the advantage is that you don’t have to give up any equity or control. Your business is yours alone.
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